Resilient Consumers and Durable Growth

By Clear Perspective Advisors on February 12, 2026

Soft Data, Strong Signal: Why Consumer Fears Are Overstated

Recent economic releases have introduced near-term market concern around consumer momentum, but we believe the broader signal remains constructive. U.S. retail sales unexpectedly stalled in December, with headline sales flat after a 0.6% gain in November. At the same time, the Employment Cost Index rose 0.7% in the fourth quarter, down from the prior quarter, bringing year-over-year wage growth to 3.4%.^[1] While these data points have prompted questions around deceleration, we view them as part of an ongoing normalization rather than a sign of consumer stress.

Wage growth remains above pre-pandemic levels, and initial jobless claims remain at historically low ranges, underscoring continued labor market resilience.^[2] Just as importantly, financial markets are reinforcing this message. The Dow Jones Industrial Average surpassed 50,000 for the first time last week, being up by +4.39% YTD, while the S&P 500 continues to trade near all-time highs, growing +1.82% YTD.^[3] In our view, it is difficult to support the idea of a weakening consumer with an economy producing record equity prices, stable employment, and broadly healthy household balance sheets.

Continued Consumer Spending

Across financial institutions, commentary on consumers remains remarkably consistent and constructive. Bank of America’s management emphasized that consumer health assumptions are unchanged from the fourth quarter, where the firm already guided to approximately 2.5–3% U.S. GDP growth and stable employment.^[4] Executives highlighted resilient spending across income cohorts, improving delinquencies, and no signs of broad-based consumer stress. This view is echoed across the industry. JPMorgan reported debit and credit card sales volumes up 7% year-over-year across income groups, while U.S. Wells Fargo pointed to stable checking activity. Wells Fargo reported deposit flow growth remaining stable at 1%, with no meaningful deterioration to payment behavior.^[5] On the payments side, Visa described U.S. holiday spending as stable versus last year, with payment volumes increasing 7% year over year.^[6] Mastercard additionally reported largely stable trends into January and noted no negative tariff impacts in its data. Despite softer sentiment readings, actual consumer behavior continues to reflect durability, reinforcing our view that fundamentals remain far stronger than headlines suggest.

Income Growth and GDP Momentum

The consumer backdrop continues to be underpinned by steady income growth and solid economic momentum. The New York Fed shows households expect incomes to grow 2.9% over the next year, with higher-income households anticipating gains of 3.6%, exceeding expected inflation.^[7] Even as wage growth moderates, it remains well above pre-pandemic norms, a dynamic that supports purchasing power and balance sheet stability. Wells Fargo emphasized that income growth has generally kept pace with inflation and debt levels, while Citigroup highlighted that easing monetary policy, tax benefits, and strong capital investment, particularly in technology, should be sufficient to sustain growth. Real consumer spending is tracking toward a healthy 3.0% pace in the fourth quarter, reinforcing consumption’s role as a key driver of GDP heading into 2026.^[8]

Labor Markets Cooling Without Breaking

Labor conditions continue to normalize without undermining consumer fundamentals. While wage growth has slowed modestly, employment remains stable and supportive of spending. Initial jobless claims remaining around 231,000 underscore the labor market’s ongoing resilience. Importantly, the New York Fed’s January consumer survey shows improving confidence around job security and mobility: the perceived probability of losing one’s job over the next twelve months declined 40 bps to 14.8%, while the probability of finding a new job within three months if displaced rose by 250 bps to 45.6%.^[9] These dynamics suggest that while hiring has cooled from peak levels, workers continue to feel secure in their employment prospects.

Bank of America reiterated stable employment assumptions consistent with fourth-quarter guidance and highlighted improving charge off ratios, down 10bps year over year, as further confirmation of labor market health.^[10] JPMorgan similarly pointed to improving credit trends as 2026 card losses guidance dropped 20 bps to 3.4%^[11], approaching pre-pandemic levels, signaling that households remain well positioned to meet obligations. A labor market that cools gradually, without material job losses, is precisely the environment that allows consumption to remain resilient while easing inflationary pressure.

Despite softer retail sales, the data continues to point toward a strong and resilient consumer. Financial institutions with direct visibility into real-time behavior report stable spending, improving credit trends, and no signs of broad stress. GDP expectations remain intact, employment is holding steady, and equity markets are signaling confidence with record highs. We believe concerns around the consumer are overstated, and we remain constructive on the economic outlook as these durable fundamentals continue to assert themselves into 2026.

^[1] US Census Bureau: Advanced Monthly Sales, as of February 10, 2026

^[2] Associated Press: US Applications for Jobless benefits, as of February 5, 2026

^[3] Bloomberg, as of February 10, 2026

^[4] Bank of America, UBS Financial Services Conference, as of February 10, 2026

^[5] Wells Fargo: Q4 2025 Earnings Call, January 14, 2026

^[6] Visa: Q4 2025 Earnings Call, as of February 29,2026

^[7] Federal Reserve Bank of New York: Labor Market Expectations, as of February 9, 2026

^[8] Deutsche Bank: Flurry of Meals & Deals, as of December 12,2025

^[9] Federal Reserve Bank of New York: Labor Market Expectations, as of February 9, 2026

^[10] Bank Of America: Financial services Conference, as of February 10, 2026

^[11] Bloomberg, as of February 10, 2026